RBI fines IndusInd Bank Rs 3 crore over compliance issues

After Yes Bank and IDFC Bank, the banking regulator has penalised private sector lender IndusInd Bank with Rs 3 crore for non-compliance with central bank’s directions on income recognition and asset classification norms.

“The Reserve Bank of India (RBI) has imposed on December 12, 2017, a monetary penalty of Rs 30 million on IndusInd Bank Limited (the bank) for non-compliance with the directions issued by RBI on Income Recognition and Asset Classification (IRAC) norms and contravention of regulatory restrictions pertaining to non-fund based (NFB) facilities,” RBI said in a statement on its website.

This penalty has been imposed in the exercise of powers vested in RBI under the provisions of the Banking Regulation Act, 1949, taking into account failure of the bank to adhere to certain directions/ guidelines issued by RBI, it said.

In October, for similar and additional reasons of not disclosing an ATM security breach on time, the RBI had also imposed Rs 6 crore penalty on its peer Yes Bank. Further IDFC Bank was also charged a penalty of Rs 2 crore for contravention of regulatory restrictions pertaining to loans and advances after deficiencies in regulatory compliance were found.

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In July, their public sector peer Union Bank of India was charged Rs 2 crore as penalty non-compliance with the directions issued by RBI on Know Your Customer (KYC) norms

The banking regulator’s action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

RBI said that the statutory inspection of the IndusInd Bank with reference to its financial position as on March 31, 2016 revealed, inter alia, violations of various regulations issued by RBI in the assessment of Non-performing Assets (NPAs) and extension of NFB facilities.

“Based on the inspection report and other relevant documents, a Notice was issued to the bank dated August 10, 2017 advising it to show cause as to why penalty should not be imposed on it for non-compliance with directions issued by RBI. After considering the bank’s reply, oral submissions made in the personal hearing, and also the additional information and documents furnished, the RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions/ guidelines were substantiated and warranted imposition of monetary penalty, the central bank added.